One of Australia’s top retailers says the government’s Budget was so good for the industry people would be forgiven for thinking business owners actually wrote it.
The government’s $5.5 billion package encourages small businesses to spend on equipment and grow operations by allowing them to immediately write off purchases worth up to $20,000.
Hours after Treasurer Joe Hockey announced the tax break for small businesses, shares for some of the country’s biggest retailers rose in value by $1 billion in one day.
Harvey Norman chairman Gerry Harvey says the government’s Budget was so good for the retail industry people would be forgiven for thinking business owners actually wrote it
Shares in electronic and homewares retailer Harvey Norman went up five percent for the first time in seven years, Fairfax Media reports.
‘I wrote the Budget and (Treasurer) Joe Hockey read it out,’ Harvey Norman chairman Gerry Harvey joked.
‘In the meantime, we’ll have ads going. From our point of view, it certainly is advantageous.’
Spikes were also recorded in other major retailers, including rival JB HI FI whose shares reached a one-year high rising by 2.1 per cent.
Wesfarmers, Woolworths, Dick Smith, Bunnings and Officeworks were all similarly buoyant.
Small businesses who turn over less than $2 million a year and have an ABN can claim a tax deduction for each and every items they purchase up to $20,000.
Purchases can include anything from cars, fridges, computers, coffee machines, building tools, printers and tables and chairs.
Shares in electronic and homewares retailer Harvey Norman went up five percent for the first time in seven years following the Budget announcement in anticipation of a spending boom
Gerry Harvey joked the Budget was so promising for retailers that he wrote it and Treasurer Joe Hockey just simply read it out on Tuesday night
Mr Hockey said the government would help out with the cost of any item for the business – from a new whipper snipper for a lawn-mowing business to a new microwave for a cafe.
The 100 percent tax deduction applies to as many sub-$20,000 purchases businesses make between 7.30pm on Budget night and June 30, 2017.
Small companies will also have tax rates chopped from 30 percent to 28.5 percent from July 1.
It comes as a major auto retailer warned small businesses and sole traders could expect a deluge of car advertisement urging them to take advantage of the $20,000 tax benefit, with the used car market potentially seeing a boost from the Budget announcement.
Martin Ward, managing director of automotive retail group AP Eagers, said anyone with an ABN or a small business would be able to buy a vehicle for under $20,000 and his understanding is that includes second-hand cars.
Treasurer Joe Hockey mentioned cars and vans in his budget night speech as potential purchases.
Spikes were also recorded in other major retailers, including rival JB HI FI whose shares reached a one-year high rising by 2.1 per cent
Joe Hockey’s Budget means small businesses who turn over less than $2 million a year and have an ABN can claim a tax deduction for each and every items they purchase up to $20,000
Few new light commercial vehicles are under $20,000 but Mr Ward said tradies may instead buy ‘cab-chassis’ utes – vehicles sold without the rear carrying tray – to get under the cutoff.
‘Having said that a lot of tradies these days have Ford Rangers that are $45,000 to $60,000 – I’m not suggesting this is going to suit everybody.’
Tax Institute counsel Thilini Wickramasuriya said the new measure could apply to second-hand cars if the government uses the definition for depreciating assets that is currently in tax rules.
Mr Ward said vehicle retailers are expecting a significant boost from the new measure and he expected dealerships around the country were working out deals to offer to buyers before the end of the financial year.
‘The market will be flooded with TV advertising between June 1 and June 30 with every possible angle on this,’ he said.
‘The car industry is very good at grabbing hold of any opportunity it is given.’
Treasurer Joe Hockey said he wasn’t concerned that small business would rort the new tax breaks.
‘People aren’t going to spend money on their business if it’s not going to make them a dollar,’ he told ABC radio when asked if he was worried people would claim plasma TVs and office couches.
Mr Hockey said the government would help out with the cost of any item for the business – from a new whipper snipper for a lawn-mowing business to a new microwave for a cafe